Donegal Group’s growth has been fueled by its acquisition of medium-sized “Main Street” carriers. Since 1995, it has completed six acquisitions or participated in other carriers’ business through quota-share reinsurance agreements.

This article is part of a Wells Media Team report on mutual insurance company challenges.

Wells Media editors Andrew G. Simpson, Stephanie Jones, Amy O’Connor and Elizabeth Blosfield spoke with top mutual executives for their views on growth and related hard and soft issues.

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The strategy is aided by its having a downstream insurance holding company.

Net written premiums increased 8.6 percent in 2015 to $628.8 million compared to 2014. Net earned premiums increased to $605.6 million for 2015, up 8.8 percent over 2014.

Acquiring other carriers remains a strategic option. But Donegal Group also looks to organic growth, according to CEO Kevin Burke.

Growth

Donegal has seen some impact of the soft market but has done quite well overall, Burke said, pointing to the inherent advantages of a mutual structure.

“Many mutuals aren’t giants. Many are regional in size, which really gives them a competitive edge if they decide to tap into it because they are in a geographical territory they may know extremely well. This has been a recipe of success for Donegal.”

Growth from both new and existing agents is part of the recipe.

“We’ve been appointing additional independent agents to sell all products through the independent agency system. Throughout our geographical footprint, there are some areas that are underserved, and as a result, we will continue to focus on appointing new agents there.

“In other areas—Pennsylvania where we’re domiciled, for example—we have an emphasis not necessarily on appointing new agents but on growing with our existing agents. That strategy has been very beneficial for us and has helped us continue to grow in a soft market.”

Technology

“If you look at where we are in the industry with technology and how it impacts insurance, it’s a double-edged sword. It represents clear opportunities for companies that have the assets and resources to utilize it, but it also represents some big challenges for mutual carriers that have not engaged or involved themselves with it or don’t have the resources available to utilize technology.”

Market

Another ongoing industry issue in recent years—suppressed interest rates that have dampened investment income—“has added some real pressure in the marketplace,” Burke said.

“When you have those pressures in the marketplace, it’s important to take a more prudent approach, stay focused on underwriting discipline and service independent agents and policyholders.”